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NTNU Norwegian University of Science and Technology Faculty of Architecture and Design Department of Design

Master ’s thesis

Nudging: Strategies and sustainability- label signifiers to influence potential sustainable food consumer behavior.

Master’s thesis in Interaction Design

Supervisor: Associate Professor Frode Volden and Assistant Professor Ole E. Wattne

January 2021

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Nudging: Strategies and sustainability- label signifiers to influence potential sustainable food consumer behavior.

Master’s thesis in Interaction Design

Supervisor: Associate Professor Frode Volden and Assistant Professor Ole E. Wattne

January 2021

Norwegian University of Science and Technology Faculty of Architecture and Design

Department of Design

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Abstract

Food production and consumer consumption are one of the main drivers and important contributors to environmental damage today. To protect nature's assets and the needs of future generations, our eating habits, food choices and purchasing decisions should be sharply adjusted towards sustainable diets. The important responsibility consumers have to achieve this is undeniable, but every day they are faced with many complex choices which often need to be addressed quickly due to lack of time. Some decisions they make are good, some accidental and some poor in terms of their own health and the well-being of the environment and society. They are also based on individual motivations. Behavior of consumers are not one and the same and motivation for purchasing decisions are triggered by many different factors. Everyone in the world uses the insight they have to make choices and decisions. Opportunities to help the consumer in making better

decisions for themselves, society and the environment lie in knowledge about this insight.

Existing theory and work on consumer segmentation, and the many motivational factors for food purchasing behavior, decision-making and drivers for potential sustainable consumption in different consumers have been investigated in this master thesis.

Additionally, it investigates how nudge design may be utilized to motivate and inspire more sustainable food purchasing behavior in the context of online grocery stores.

Insight and data from this research have been analyzed, extracted and used to answer my research questions and to create a segmentation model, consumer segment profiles, nudge strategies and design suggestions.

A proposed segmentation model for potential sustainable behavior in this thesis is based on five fundamental drivers of behavior: Socio-demographics, Psychographics, Consumer Sustainability Consciousness, Food-Related Lifestyle and Heuristics. Three potential sustainable consumer segments are distinguished: “Explorer”, “Likely consumer” and

“Occasional byer”. This segmentation model is further used to develop nudge strategies and sustainability label designs and highlights how these may be effective to use to motivate consumers in the different segments. The strategies are constructed by three components: 1) The level of motivation for purchasing behavior based on values, attitudes and food-related lifestyle, 2) How consumers think, their processing style for decision-making and triggers, and 3) Types of nudge mechanisms used to influence food consumption. Why these strategies and interventions potentially may be stronger in promoting food sustainability than existing systems of sustainability labels are discussed and argued.

This master’s thesis provides a consumer segmentation model and framework for developing potential sustainable consumer segments. In addition, it provides insights about the potential sustainable food consumer's values, needs, motivations and decision- making processes. Based on differences in the consumer segments behavior, tailored nudge strategies and design are proposed as an instrument in “sustainability-label signifiers” as guides to influence consumers' choices towards a sustainable food consumption.

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Sammendrag

Matproduksjon og forbruk er en av de viktigste drivkreftene og bidragsyterne til miljøskader i dag. For å beskytte naturens ressurser og behovene til fremtidige

generasjoner, bør våre spisevaner, valg av mat og kjøpsbeslutninger snarlig tilpasses til et bærekraftig kosthold. Det viktige ansvaret forbrukerne har for å oppnå dette er ubestridelig, men hver dag står de overfor mange komplekse valg, som kanskje må løses raskt i en travel hverdag. Noen beslutninger de tar er gode, noen tilfeldige og noen dårlige med tanke på deres egen helse og trivsel for miljøet og samfunnet. De er også basert på individuelle motivasjoner. Forbrukernes atferd er ikke den samme og

motivasjonen for kjøpsbeslutninger utløses av mange forskjellige faktorer. Alle i verden bruker den innsikten de har for å ta valg og beslutninger. Muligheter for å hjelpe

forbrukeren med å ta bedre beslutninger for seg selv, samfunnet og miljøet ligger i kunnskap om denne innsikten.

Eksisterende teori og arbeid som omhandler segmentering av forbrukere og de mange motivasjonsfaktorene for kjøpsatferd for mat, beslutningstaking og drivere for potensielt bærekraftig forbruk hos forskjellige forbrukere, er studert i denne masteroppgaven.

I tillegg tar den for seg hvordan nudge-design kan brukes til å motivere og inspirere til mer bærekraftig kjøpsatferd av mat i digitale dagligvarebutikker. Innsikt og data fra denne forskningen har blitt analysert, hentet ut og brukt til å svare på mine

forskningsspørsmål og for å utvikle en segmenteringsmodell, forbrukersegmentprofiler, nudge-strategier og designforslag.

En foreslått segmenteringsmodell for potensiell bærekraftig atferd i denne

masteroppgaven er basert på fem grunnleggende drivere for atferd: Sosialdemografi, psykografi, forbrukernes bærekraftsbevissthet, matrelatert livsstil og heuristikk. Tre potensielle bærekraftige forbrukersegmenter utmerker seg: “Utforsker”, “Sannsynlig forbruker” og “Tilfeldig kjøper”. Segmenteringsmodellen blir deretter brukt til å utvikle nudge-strategier og bærekraftsdesign og belyser hvordan disse kan være effektive å bruke for å motivere forbrukere i de forskjellige segmentene. Strategiene er konstruert av tre komponenter: 1) Motivasjonsnivået for kjøpsatferd basert på verdier, holdninger og matrelatert livsstil, 2) Hvordan forbrukere tenker, deres behandlingsstil for

beslutningstaking og utløsere, og 3) Typer av nudge-mekanismer som brukes til påvirke matforbruket. Hvorfor disse strategiene og intervensjonene potensielt kan fungere bedre enn eksisterende systemer for bærekraftsmerker blir diskutert og argumentert for.

Bidraget i denne masteroppgaven er en forbrukersegmenteringsmodell og et rammeverk for å utvikle potensielle bærekraftige forbrukersegmenter. I tillegg gir oppgaven innsikt i den potensielle bærekraftige matvareforbrukerens verdier, behov, motivasjoner og beslutningsprosesser. Basert på forskjeller i forbrukersegmentenes atferd, foreslås

tilpassede nudge-strategier og design som et instrument i “sustainability-label signifiers”, som veiledning for å påvirke forbrukernes valg mot et bærekraftig matforbruk.

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Preface

This master’s thesis is the final project of the Master’s in Interaction Design from NTNU in Gjøvik. Conversations with friends about their needs, as well as personal interest for better visibility of different aspects of sustainability in food products, inspired me to investigate existing sustainability labelling schemes, relevant topics on consumer behavior, sustainable food consumption and theory of nudging, which finally led to this master’s thesis project. This report is mainly written for those who work in the fields of design, advertising and marketing.

NTNU in Gjøvik 05-01-2021 Mona Christin Loftum Hellstrøm

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Acknowledgment

I would like to thank several people for their good advice, guidance and support throughout this master's thesis project and during the Master study of Interaction Design:

My supervisor Frode Volden, Associate Professor, who with his deep understanding and experience in psychology and research methodology for his many important and valuable inputs on behavior and individual differences in human beings, and critical questions about the objective of my thesis which led me in the right direction.

My co-supervisor Ole E. Wattne, Assistant Professor who first introduced me to the topic

"nudging" and thus inspired me to go down this path and further investigate this theme in my master thesis project. I highlight his expertise in visual design and how to support multiple user groups, readability and redundancy.

Without their advice and contribution this master’s thesis project would not have been completed.

My husband for his contribution and advice in this thesis as well as the support I needed to be able to complete this master's program.

I also want to thank my family and friends for the many contributions I have received throughout my master study in Interaction Design.

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Table of Contents

Abstract ... v

Sammendrag ... vi

Preface ... vii

Acknowledgment ... viii

Table of Contents ... ix

List of Figures ... xi

List of Tables ... xi

List of Abbreviations ... xi

1 Introduction ... 1

1.1 Keywords ... 1

1.2 Justification, Motivation, Benefits ... 2

1.3 Research questions ... 5

1.4 Contribution ... 5

2 Theory, Background, Existing literature ... 6

2.1 Consumer behavior theory ... 6

What is consumer food purchasing behavior? ... 6

Food consumption behavior taxonomy ... 7

Consumer behavior models sustainable consumption ... 8

2.2 Motivation and decision-making processes ... 9

Factors influencing decision-making in food purchases...10

2.3 Segmentation theory ...11

What is segmentation? ...11

Segmenting the sustainable food consumer...13

2.4 Nudge theory...14

What is nudging? ...14

How we think – two systems of the mind ...16

Choice architecture ...20

Ethical nudges ...23

2.5 Nudging for a sustainable food consumption ...23

Orientations of nudges ...26

Selection of nudges ...26

3 Methodology ...28

3.1 Segmentation for sustainable food consumer behavior ...28

Segmentation model ...28

Segmentation variables sustainable food consumer ...29

3.2 Consumer segments and profiles ...29

Potentially sustainability consumer segments ...30

3.3 Nudge strategy and design ...30

Nudge strategies ...31

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Nudge design ...32

4 Results and Discussion ...33

4.1 Process model ...33

4.2 Segmentation for sustainable food consumer behavior ...34

Segmentation model ...34

4.3 Consumer segments in terms of sustainability ...37

Potentially sustainability consumer segments ...37

4.4 Nudge strategies and design ...41

Nudge strategies ...41

Nudge design – Sustainability label-signifiers ...43

Nudge design and strategies implemented ...46

4.5 General discussion ...49

Segmentation model ...49

Nudge strategy and design ...50

Further work ...51

5 Conclusion ...53

Bibliography ...54

Appendices ...59

Appendix 1: Process model ...60

Appendix 2: Segmentation model ...61

Appendix 3: Consumer segment profiles ...65

Appendix 4: Sustainability label-signifier, wireframe. ...68

Appendix 5: Traffic-light metaphor ...69

Appendix 6: Sustainability label-signifier strategy and design ...70

Appendix 7: Sustainability label-signifiers applied in context ...71

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List of Figures

Figure 2.1: Determinants of food consumption behavior (Steenkamp, 1993) ... 7

Figure 2.2: Continuum of buying decision behavior (Lawley, 2011) ...10

Figure 4.1: Process model. ...33

Figure 4.2: Consumer segment profile: “Explorer”. ...38

Figure 4.3: Consumer segment profile: “Likely consumer”. ...39

Figure 4.4: Consumer segment profile: “Occasional byer”. ...40

Figure 4.5: Wireframe illustrating the construction of a sustainability label-signifier. ...44

Figure 4.6: Traffic-light colors applied to represent the level of food sustainability. ...45

Figure 4.7: Sustainability label-signifier for the segment “Explorer”. ...47

Figure 4.8: Sustainability label-signifier for “Explorer” applied in context. ...47

Figure 4.9: Sustainability label-signifier for the segment “Likely consumer”. ...48

Figure 4.10: Sustainability label-signifier for “Likely consumer” applied in context. ...48

Figure 4.11: Sustainability label-signifier for the segment “Occasional buyer”. ...49

Figure 4.12: Sustainability label-signifier for “Occasional buyer” applied in context. ...49

List of Tables

Table 2.1: The difference between traditional forced change and nudge techniques. ...16

Table 2.2: Characteristics of the two cognitive systems (Kahneman, 2011). ...17

Table 2.3: An overview of heuristics and cognitive biases (Thaler and Sunstein, 2009). .19 Table 2.4: Six principles in choice architecture; NUDGES (Thaler and Sunstein, 2009) ..22

Table 2.5: Four effective nudge mechanisms (Lehner, Mont and Heiskanen, 2016). ...25

Table 4.1: Segmentation model for potential sustainable food consumer behavior. ...36

List of Abbreviations

S Socio-demographics

P Psychographics

CSC Consumer Sustainability Consciousness

FRL Food-Related Lifestyle

H Heuristics

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Our world is facing four major crises: Economic, inequality, resource and environment (Bjonnes and Hargreaves, 2016). If we do not act fast and prioritize to adapt towards a sustainable economy, our civilization is threatened to end and nature, society and the economy are in the worst scenario predicted to break down. We see abuse of nature's resources and exploitation of people and violation of animal welfare and human rights.

We overproduce food and businesses are far from operating and producing ethically and sustainably. The methods we use to produce and distribute food today are a "sign" of our unsustainable planet.

In recent years consumers have lost confidence in producers and the food supply chain, after several incidents and scandals have taken place. The quality and safety of food production systems are questioned after crises such as dioxin pollution, swine fever and bird flu. The virus COVID-19, and the Corona Pandemic we currently experience, where the origin of the virus is unknown, add to the fear. Reliable sources such as who.int states that Wuhan City in China was the source of this outbreak and suggest that it originates from wild animals sold as food at a Chinese market free from control systems and restrictions.

The book “An Inconvenient Truth” by Al Gore contributed to raise massive consumer sustainability awareness in 2006 (De Carvalho, Salgueiro and Rita, 2015). This growing awareness of sustainability issues cause consumers to question their own unsustainable habits and how they affect environmental and social issues (Maiteny, 2002). This create anxiety and the author suggests three main responses to that “call for action”: “denial”;

“do your bit” and feeling of “connectedness” in a sense of responsibility (De Carvalho, Salgueiro and Rita, 2015).

Many variables and ethical dilemmas will arise in any purchasing situation, making it a challenge to decide “right” from “wrong". In purchasing decisions people may emphasize factors such as “naturalness”, safety and environmental conformity. Consumers use different methods in their search for reliable information about the food they plan to eat, and there is a growing demand for food with characteristics of sustainability. Consumers are different individuals which each have individual needs and are motivated by a

number of different factors. Consumer decision making processes are driven by internal variables such as personality, values, attitudes and emotions, and external factors such as upbringing, culture, social norms, habits and situations or context.

This spiral of exploitation can only be reversed by raising consumer awareness – more transparency is called for. Time is up for change, a change in food purchasing behavior and consumption. A friendly, proper designed nudge to guide in the right direction might be one key to a solution.

1.1 Keywords

Segmentation, Consumer behavior and motivation, Consumer purchase decision-making processes, Sustainable food consumption, Consumer Sustainability Consciousness, Food- Related Lifestyle, Heuristics, Nudging, Ethics.

1 Introduction

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1.2 Justification, Motivation, Benefits

One of the main drivers and important contributors to environmental damage today is food production and consumer consumption (Notarnicola et al., 2017). Consumer behavior is the main reason for society's impact on the environment, and actions and choices people make to consume food products and live their lives have direct impact on the environment as well as on personal or collective welfare (Jackson et al., 2005). Our eating habits, food choices and purchasing decisions should be sharply adjusted to protect nature's assets and the needs of future generations.

People have been encouraged to support a more sustainable consumption through a variation of activities such as financial incentives, laws, education and communication campaigns (Vandenbroele et al., 2019). Despite these efforts, people still struggle to change their eating habits or consume to support sustainability.

On the contrary, trends show that consumers wish to consume more sustainable food but there are some challenges for consumers in knowing whether products are truly

sustainable, why and how they are sustainable and limited availability to some

consumers due to its high price. These may be symptoms of multiple problems or needs.

This could mean that consumers lack an interest or distrust the sustainability in food, that they lack knowledge about the benefits and properties of food sustainability in products or that they lack an effective and user-friendly guide to sustainability. Further encouragement is thus needed to support and inspire to a sustainable food consumption.

Conversations with friends and acquaintances about their need for salience of sustainable aspects in food products visible and conversations with employees in grocery stores responsible for the store's selection of fish, shellfish and meat products and the lack of visibility of these sustainability concepts in those, the seed for this master’s thesis project was sown. The need for simplified information and desire for knowledge about additives, nutrients, how food have been produced and where is present.

The food industry has understood that there is much to be gained financially by branding their products as ethical, sustainable and environmentally friendly towards consumers.

What this really means and to what extent the products are sustainable are still not clear to all. However, a number of brands are striving to support goals relative to sustainable consumption and production. The Danish company Danske Carlsberg Beer is aiming for a zero-carbon footprint by 2030, and American Ben and Jerry’s seeks to educate visitors on climate change and have run climate change advocacy projects since 2007 (Ruggeri, 2017). Sustainability also includes human working conditions. An important focus and company goal of Whole Foods is to only sell sustainably caught fish. Through this, they ensure that working conditions for fishermen are worthy and in this way fight slave labor (Ruggeri, 2017). Norwegian "Stølsvidda" is a family business and a mountain farm in Valdres which breeds pigs. Their business model is to produce pork meat with a mode of operation that is best suited to the animals, nature and food quality (Stølsvidda, no date).

There are international and Norwegian approved labelling brands designed to guide consumers to choose what they believe is best for themselves or the environment. They hold a variety of information i.e., about the origin of food products, questionable

chemicals, nutritional content, climate imprint and ethical aspects of food production.

“The Norwegian Food Safety Authority” (Mattilsynet) is a governmental agency and supervisory authority, which mission is to help ensure safe food for consumers and

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promote public, plant, fish and animal health, as well as environmentally friendly production and ethically sound fish and animal behavior (Merking av matvarer, 2019).

“BRCGS Global Standard for Food Safety” is a global standard based on updated safe food standards and methods and one of the most commonly used tools for due diligence and supplier approval. It helps companies select and qualify their suppliers, thus

reducing the overall costs in the supply chain and increasing the security of suppliers and consumers (BRC, 2019).

“Framtiden i våre hender”, an idealistic organization that advocates green consumption and resource justice, provides a brand guide. The purpose is to provide information on who is behind the label, and criteria for control, transparency and cost of using the label (Thoring, 2017).

Further, there are over a hundred eco-labels for the environment, social conditions and animal welfare on products exists in the Norwegian market (Forbrukerrådet, no date).

Attempts to convey what these brands stand for to consumers in an easy-to-understand and informative way have been made through various solutions.

“The Norwegian Consumer Council” offers a brand overview with simplified information about branding schemes. However, as they state themselves, some labels are

informative, while others are confusing.

Whether these existing eco-labels attempted to use are effective, trusted or matter to consumers in a food purchasing context is a big question. To navigate the jungle of such labels in a hasty day-to-day life and different situations is time-consuming and complex.

Precisely in such a scenario, lies opportunities to help the consumer to make decisions that are better for themselves, society and the environment.

The biggest void with existing sustainability-labels is that they represent one dimension of sustainability and leave much of the responsibility to the consumer to understand their purpose of use. In addition, these labels also lack the “smartness” needed to succeed as an effective label or nudge, meaning to tailor the nudge through personalization and context-awareness (Karlsen and Andersen, 2019a).

One idea is to use principles from nudge theory (Thaler and Sunstein, 2009) and

mechanisms to make complicated or hidden information more accessible in an attempt to utterly raise awareness and knowledge about the sustainability benefits of consuming sustainable food products. “Nudging” is a term from behavioral science used to influence behavior and decision making of groups or individuals using suggestions and positive reinforcement in a non-intrusive way.

A possible solution is to use a nudge strategy that promotes the sustainability benefits of a food product and thus try to encourage and help people make conscious, healthy, safe and sustainable choices and decisions. Another is to provide consumers with a color management system for food sustainability to be used as a tool aimed at making decision-making processes easier.

A nudge mechanism such as “Language and signage design” - 'stimulus response

compatibility' is a potentially useful tool to employ to meet consumer’s growing need for simplified information to comprehend the sustainability aspect of food products.

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A labelling system in the form of a traffic-light metaphor using the well-established colors green, yellow and red where green represents “most” sustainable, yellow “partly”

sustainable and red “least” sustainable, could be implemented as a food sustainability guide.

Descriptive labels may additionally be used in conjunction with each color and each example communicate three aspects of sustainability: environmental welfare, animal welfare and social justice. Such an “easy to understand” food sustainability purchasing decision-making guide may benefit consumers who want to obtain a sustainable diet, who want to make “right choices” to obtain emotional balance in one’s life, or even inspire “potentially green” consumers to a sustainable food consumption.

Nudging used to influence sustainable behavior is a relatively new concept. Literature on the theory of Nudging have existed for some time, but the most referred to is the book

“Nudge – Improving Decisions About Health, Wealth and Happiness”, by Thaler and Sunstein (2009). The number of scientific studies which discuss possible solutions for effective nudge strategies and interventions to influence sustainable consumption and behavior are substantial.

Theory on the topics of segmentation, consumer behavior and consumer decision-making processes was surveyed in online articles, research articles and books in this master’s thesis. These insights about methods and strategies for segmentation, consumer

behavior and consumer decision-making processes and the works of Thaler and Sunstein, Kahneman and Fogg, made the theoretical foundation for creating a segmentation model for potential sustainable consumer behavior which provided the tool needed to defend and develop nudge strategies and design in this project.

Would it be possible to consume sustainable food and beverages alone, probably not yet, prices are still high and product offerings limited. However, by using "nudging" as an instrument to make complex information informative and easy to understand for the consumer, we may be able to enlighten and thus help to alter the consumer's perspective from "cheapest" to "ethical” and influence people's purchasing behavior into a sustainable one. The question is how nudging may be applied as an instrument to improve food purchasing experience for consumer segments in an online environment.

This master's thesis aims to create a model for defining potential sustainable consumer segments based on different personality characteristics and motivation for food

purchasing behavior. Next, defended by insight from the segmentation model, develop strategies and design of sustainability labels which thus provide the consumers segments with the support they need to make conscious choices in a food decision-making process.

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1.3 Research questions

Research questions to be addressed and answered in the master’s thesis project are:

1. What consumer segmentation variables and factors for decision-making should to be included in a segmentation model as determinants for defining potential sustainable consumer segments and purchasing behavior?

2. Which components of consumer purchasing behavior is most beneficial to use to develop effective nudge strategies to these segments?

3. Which nudge mechanisms may be used in the strategies, and how do we make

“food sustainability-calls” relevant to these segments?

4. How do we frame and present information to provide the consumer segments with the support they need to go through a decision-making process?

1.4

Contribution

This master’s thesis provides a segmentation model and framework for developing potential sustainable consumers segments. In addition, this master’s thesis provides insights about the potential sustainable food consumer's values, needs and motivations.

Based on differences in consumer segment behavior, tailored nudge strategies and design applied as an instrument in a “sustainability guide” to inspire and influence consumers choices towards a sustainable food consumption is proposed.

In this master thesis, three potential sustainable food consumer segments are defined:

the “Explorer”, the "Likely consumer" and the "Occasional buyer". The characteristics of these segments was based on consumer behavior defined by the results provided by employing the segmentation model.

The purpose of the “sustainability guide” is to raise consumer awareness and knowledge about sustainability in food products, and thus make it easier for potential sustainable food consumers to make conscious decisions and choices in line with their personal values, needs and beliefs.

In addition, the goal is make sustainability attributes about food and availability in the market more prominent or salient to consumers, as well as to establish trust, security and inspire to commitment. This can be achieved through the use of targeted strategies to different potential segments with the use of proper nudge mechanisms such as

“Language and signage design” and “Simplification and framing of information implemented in a sustainability label-signifier design.

How to develop fundamentally different hypothetical strategies to different consumer segments based on their motivation and food-related behavior, and how to design sustainability label-signifiers framed to reflect these strategies and provide the different consumers with the support they need in their food decision-making process, defended by a generic segmentation model for sustainable food behavior, is my contribution.

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2.1 Consumer behavior theory

A consumer is an individual who identify and try to fulfill a personal need or desire through buying and consuming a product.

Consumer behavior is “the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires.” (Solomon, Russell-Bennett and Previtte, 2013).

Consumer behavior is about understanding the processes which motivate and drive people to make purchasing decisions. In the 1940s and 1950s consumer behavior

developed into a separate discipline of marketing, which later became an interdisciplinary social science, combining elements from various fields such as psychology, sociology, social anthropology, anthropology, ethnography, marketing and notably, behavioral economics (Consumer behaviour, no date).

Consumer behavior is defined as "the dynamic interaction of affect and cognition, behavior, and environmental events by which human beings conduct the exchange aspects of their lives." (Bennet, 1995).

Consumers behavior is influenced by a wide range of internal and external factors.

Research on consumer behavior properly examines personality traits such as

demographics, lifestyle, and behavioral variables (e.g., level of use, use cases, loyalty, brand promotion, and referral) to understand desires and human consumption.

Additionally, examined is the impact on behavior of groups such as family, friends, co-workers, clubs and associations, politics, culture, society or other brand influencers (Consumer behaviour, no date).

Knowledge about consumer behavior provides a fundamental foundation for

understanding the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires

(Solomon, Russell-Bennett and Previtte, 2013).

What is consumer food purchasing behavior?

The processes that drive people to make purchasing decisions are important to explore and understand, and consumer behavior enclose the disciplines psychology, sociology and economics. That consumption is a process is important to understand in order to influence consumer behavior. The consumption process consists of the three stages pre- consumption, consumption and post-consumption. Pre-consumption refers to how and why consumers first decide they need a product. Consumption refers to the experience of buying the product, consumer roles being played and how the purchase reflects their own identity. Post-consumption refers to the consumer's judgement of whether a product delivered and was as expected, and how the product is disposed (Solomon et al. 2013).

(Lawley, 2011).

In the literature several models of determinants of food consumption behavior have been proposed. Pilgrim (1957) proposed one of the earliest and most influential models

2 Theory, Background, Existing literature

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(Pilgrim, 1957). In his model, food consumption depends on perception (E.M.

Steenkamp, 1993). Pilgrim talked about accepting food instead of eating food. However, he recognized that the operational definition of food acceptance is food consumption.

Further Pilgrim state that the perception of food is a function of three factors: 1) physiological effects of the food, 2) perception of sensory attributes, and 3) influences from the environment (E.M. Steenkamp, 1993). Pilgrim hypothesized that these determinants could influence food consumption, however failed to explore these interrelationships.

Food consumption behavior taxonomy

There are a number of factors that influence people’s food purchases. Three types of determinants generally distinguish food consumption behavior; 1) properties of the food, 2) factors related to the person involved in food consumption and 3) environmental factors (E.M. Steenkamp, 1993).

Figure 2.1: Determinants of food consumption behavior (Steenkamp, 1993)

The borders in between these three key determinants are not clear and mutual influence is possible. This means that all three types of determinants must be taken into account when analyzing food consumption behavior. In addition, the taxonomy shows that there are many specific factors associated with each type of determinant. Food properties include physical and chemical properties and nutrient content like physical form,

macronutrient ratios, fiber, energy, and the number of certain substances such as sugar, 1

2

3

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salt and spices. Properties like these influence the eating behavior of foods through their physiological effects (e.g., hunger, boredom, appetite) and feelings. Personality factors include biological factors (age, sex, body weight), psychological factors and personality.

Environmental factors include sociocultural, economic, and marketing factors (E.M.

Steenkamp, 1993).

Consumer behavior models sustainable consumption

Consumer behavior is at the core of how society affects the environment. Individual actions and choices to consume products, how much people consume or choices of lifestyles directly affect the environment, in addition to personal and collective welfare (Jackson et al., 2005). Food consumption is no exception.

Motivating more sustainable behaviors is not a straightforward task. People make choices that lead to action, but how and why they make their choices are important to answer to understand consumers motivation and behavior. Why people consume the way they do and what factors trigger or limit their choices and actions are also relevant questions.

Finally, questions such as why and when people behave in an environmental or prosocial way (Jackson et al., 2005) need to be answered in order to encourage, motivate and facilitate more sustainable attitudes, behaviors and lifestyles in terms of food

consumption.

Several models of consumer behavior and of behavioral change has been developed over the course of years. The role of models serves two important purposes for understanding the motives and driving forces behind consumer behavior and behavior change. One purpose is that they provide the necessary heuristic framework needed to explore and conceptualize consumer behavior. In the work of understanding the social and

psychological influence on both ordinary behavior and pro-environmental (social)

consumer behavior, they are particularly useful. Some models provide conceptual insight into the psychological causes of behavior, others show how social norms affect behavior while others emphasize how different values affect behavior. Heuristic understandings as such are helpful for identifying points of nudge interventions. Another purpose is that these models can be used as a basis for conceptual structure to test empirical strength between relationships such as values and behavior under different phenomena.

In other words, some models work better for heuristic understanding internal (cognitive) aspects of individual decisions and focus on the prerequisites and stimuli of behavior such as values, attitudes, and intentions. Other focus more on external stimuli such as family, friends, culture, social class, incentives, habits and situational determinants which work better for empirical testing. A good conceptual model requires a balance between parsimony (tight number of parameters to explain a given phenomenon) and descriptive completeness. To understand behavior a multi-dimensional view which incorporates both internal and external elements is this required.

According to Stern (2000), an effective model in terms of sustainable behavior must pay special attention to the following factors (Stern, 2000):

• motivations, attitudes and values

• contextual or situational factors

• social influences

• personal capabilities

• habits

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In his book “Thinking, Fast and Slow”, Daniel Kahneman refer to research performed by himself and Amos Tversky, and discuss human decision-making and how the mind are operated by two systems called system 1 and system 2, and how these two systems work together and influence human decision-making (Kahneman, 2011).

As described by the author, system 1 works automatically and quickly, without effort or feeling of voluntary control. System 2 allocates resources to more strenuous mental activities, including complex calculations that require a lot of effort and are linked to the subjective experience of choice and concentration.

Most of what our system 2 think and do comes from system 1 and is passed on to system 2 when things get challenging. System 2 usually has the last word, and this makes the distribution of work between the two is very efficient. What it means for decision-making and behavior is that the effort is minimized and the performance is optimized (Kahneman, 2011), and thus makes decision-making for behavior more effective.

B. J. Fogg, Director of the Stanford Behavior Design Lab, developed The Fogg Behavior Model (FMB), a framework or model to make it easier to understand behavior (Fogg, 2019). Included in this model B=MAT, are the three variables: Motivation, Ability,

Trigger. Fogg suggests that these three elements must converge for behavior to happen, and without one it will not.

Further, Fogg outlines three types of motivational triggers: Facilitator, Signal and Spark.

The first trigger Facilitator is used to make behavior easier aimed at people who are motivated but not responding because something seems hard (perceived lack of ability).

The second trigger Signal is used to indicate or remind someone to perform a behavior.

When a person is both motivated and have the ability to do something, all needed is a straightforward “signal”. The third trigger is Spark which aims to motivate behavior in someone which is capable of doing a task (has the ability), but not motivated.

A trigger can be of an external (sensory stimuli) or internal (in your mind) nature (Eyal, 2014). External triggers are something in your environment that tells or reminds you to do something. It could be the sound of your growling stomach, a post-it-note, or the opening of the fridge due to habit. Something external (all around you) is nudging you to do something. Internal triggers are any feeling or emotion that reminds or tells you to do something. This could be the feelings of hunger, craving or thirst, and emotions such as happiness, sadness or boredom. Some internal signal nudges you to do something.

2.2 Motivation and decision-making processes

Everybody in the world use the insight they have to make choices and decisions.

The consumer decision-making process (problem-solving) may seem standardized, but no two people make decisions in exactly the same way. As previously described, factors that motivate and affect the consumer's problem-solving process are multiple and complex. Consumers may have similar needs, but how they want to satisfy their needs differ (Kass and Clark, 1959), (Lawley, 2011).

Thus, we can say that people experience different types of decision-making processes when they decide how the needs should be satisfied in the best possible way (Lawley, 2011). Sometimes we eat the first thing we see; the choice is quick (automatic and intuitive) and satisfies the need "hunger". Other times we might be hungry but awaits to satisfy the hunger to find food with a functional benefit that can provide a more

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enjoyable experience. In decision-making situations as such (analytical and reflective) the factor risk is all of a sudden involved as well as a number of other influencing factors.

"Risk" in relation to purchase of food may mean the belief that the purchase of the

product does not live up to expectations or have negative consequences. Generally, there is a low risk associated with food products, but this is related to the consumer. If a

person has diabetes the risk of buying sugar rich food may be considerable. This provide an explanation for how consumer decision-making approaches may be very simplistic or very complicated and are stimulated by many factors.

Factors influencing decision-making in food purchases

The psychology of choice and decision making is relative to how people make choices in their lives in any situation. Suggested by theory, decision-making may be organized into three main types referred to as habitual, limited and extended (Solomon et al. 2013).

These represent the types of decision-making processes consumers go through to make a purchase.

Figure 2.2: Continuum of buying decision behavior (Lawley, 2011)

Some decisions are routine and require little or no thought effort. These types of

purchasing decisions are called habitual and are characterized as automatic and intuitive in nature (Solomon et al. 2013). Habitual decisions are considered to be more

challenging to approach and influence.

Other decisions, and the most commonly used, are decisions made with some minimal thought. This type of purchase decision-making is called limited and is characterized by how consumers typically rely on heuristics or simple rules of thumb to make decisions (Solomon et al. 2013). The use of heuristics within limited decision-making is often based but how a product makes us feel, not only what it does. Examples of such heuristics are price, brand and place of origin. Illustrative of a limited purchase decision is e.g., to buy organic turkey because you feel it is both superior in taste and is healthier to eat.

A third type of purchase decision-making, and the most complex process is called extensive. This type of process requires higher cognitive attention and is characterized by consumers going through a series of steps to make a purchasing decision. Purchases of this kind typically require higher attention, research and evaluation because they are more expensive to buy, or have higher social visibility such as fashion, a car, a house or certain food.

Unlike habitual or limited types of food purchase decision-making processes, the growing consumer awareness of food trends and sustainability demand more extensive decision- making. There are potentially many opportunities for stimulating the consumer into making sustainable food purchases during this extensive decision-making process. This

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by nudge interventions designed to help to confirm or deny risk, support or affect emotions or meet or clarify heuristic preconceptions.

Essential to acknowledge is that consumers are triggered by different motivational factors and use different methods and processes to make decisions. One type of decision-making process that is habitual for one may be of limited decision-making for another, or complex decision-making for a third.

Decision-making purchasing processes and problem-solving is stimulated by a wide range of internal and external factors (Solomon et al. 2014). While internal factors influence the psychology of consumers from within, external factors influence psychology internally.

Internal influences refer to demographics, psychographics, personality, motivation, attitudes, lifestyle, learning, perception and feelings (Solomon et al. 2014). Hunger is an example of internal stimuli (motivation) driving the consumer to satisfy their need.

External influences refer to social and situational factors and may represent culture, subcultures, social class, group membership, knowledge or situation (Solomon et al.

2014). Repetitive social gatherings (rituals) are a type of social influence that is specifically related to how and why consumers buy food.

2.3 Segmentation theory

What is segmentation?

Segmentation is a marketing strategy and the process of breaking down a heterogeneous and broad consumer or business market into sub-groups of consumers (segments) based on some type of shared characteristics and who have common needs and priorities and use this information to develop and implement strategies for communication and influence (Pride et al., 2018).

Segmentation is about dividing the market into small groups of consumers who share similar characteristics. Since all consumers within the same group have a common profile, marketing strategies or other strategies for influencing and call-to-action, can be tailored to target a specific type of consumer. The goal of segmentation is to identify the segments that are likely to be most profitable or have growth potential so that they can become target markets (Market segmentation, no date).

Four basic criteria for market segmentation are set by Paul Green and Donald Tull in their 1978 book Research for Marketing Decisions (Green and Tull, 1978):

1. The segments must exist in the environment (and not be a figment of the researcher’s imagination).

2. The segments must be identifiable (repeatedly and consistently).

3. The segments must be reasonable stable over time.

4. One must be able to efficiently reach segments (through specifically targeted distribution and communication initiatives).

Traditionally, marketers aim for a process that minimize differences between members of a segment and maximize differences between each segment, and to choose the right base requires proper planning, and insight and understanding of the market to be segmented (Market segmentation, no date).

According to Gavett, G. (2014), any base or variable may be used in segmenting a market provided that it is identifiable, substantial, responsive, actionable and stable

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(Gavett, 2014). Five characteristics. In sum, identifiable refer to the degree to which different groups within the market can be identified. Substantial refers to the extent to which a segment or group of customers represents a sufficient size to be profitable.

Sustainability refers to whether a segment represents a profitable sufficient size.

Responsive refer to what degree consumers in a defined segment will respond to marketing offers aimed at them. Actionable refer to when segments are accessible and provide aid for marketing strategies. Stable refer to a segment being stable enough for a long enough period of time to be marketed to strategically (Gavett, 2014).

The most common bases for segmenting consumer markets include the four key types of segmentation variables geographics, demographics, psychographics, and behavior

(Market segmentation, no date). Many subcategories can be used to identify different markets, but they are placed under each of these four types of segmentation.

Geographical segmentation is based on where people live, and typical segmentation variables may include country, region, city and climate zone etc. Demographic

segmentation classifies consumers by demographic characteristics such as age, ethnicity, gender, family structure and income (Reid and Bojanic, 2009), and to assume that consumers similarity between demographic profiles and buying patterns, motivations, interests and lifestyles is a prerequisite for demographic segmentation in order to be able create effective and appealing promotions.

Demographic segmentation may also include characteristics based on generation.

Traditionally generation is divided into four categories. Generation Z (millennials (1995 plus), Generation Y (1980- 1994), Generation X (1965- 1980) and Baby Boomers (1946- 1964). Generation Z is referred to as the persuasive force in the economy, the “child pester power” (Solomon, Russell-Bennett and Previtte, 2013) a term used to describe children's negative influence in their parents' buying habits. Generation Y is referred to as challenging to reach through traditional marketing efforts. Generation X is referred to as individualistic, opinionated and a group not seeing themselves as a target market.

Baby Boomers are referred to as big spenders, approaching retirement, big market.

When promoting sustainable food to influence food purchases, relevant to consider is also how each generation might consume food (Lawley, 2011). Generation Z is growing up with “access to everything” through internet and influenced by social media, and thus would likely be open to food-trends such as healthy, quick and easy street-food in pop- up restaurants or from food trucks. Generations Y and X grew up being exposed to various cuisines from all corners of the world and would and this, with access to wider range of untraditional food in grocery stores, likely be more open to a wider variety of food than previous generations. Contemporary specialized restaurants serving locally produced or food directly harvested from nature would most likely be on their radar.

Baby boomers often has the most discretionary income to spend on food purchases due to the fact that children usually have left home. This generation may have the ability to shop more expensive foods. However, taken into account that this generation grew up at a conservative time when a meal "should consist of one type of meat and four

vegetables", not necessarily mean that they shop more expensive protein nor buy vegetables which have beneficial sustainability attributes.

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Segmenting the sustainable food consumer

Having a general understanding of consumer behavior related to food purchases is valuable when segmenting in terms of sustainable food consumption. Segmenting to point out which type of consumer are likely to purchase certain types of food products and develop nudge strategies and design is essential. Many research articles and reports are written on the subject sustainable food consumer and how to define this segment.

Questions are which segmentation framework works best to define the sustainable consumer, and which measurable variables are the most effective parameters for segmenting and identifying similar and different characteristics.

The research report “Segments of sustainable food consumers: a literature review”, Verain, et. al (2012) provide insights from published studies that have

segmented consumers with a view to sustainable food consumption. They state that to explain the sustainable food consumer and behavior would be to challenging by using just the traditional socio-demographic factors alone (Verain et al., 2012). They found that segmentation and profiling variables used in differentiating consumer segments in terms of sustainability, was categorized into the three levels of abstraction. These are personality characteristics, food-related lifestyles and behavior (Verain et al., 2012).

Further, socio-demographic variables was frequently used for profiling and thus considered relevant to classify sustainable food consumption (Verain et al., 2012).

Behavior variables such as price and health was also recognized as variables, despite these just relate to sustainability indirectly (Verain et al., 2012).

Food-Related Lifestyle (FRL) is a frequently used classification variable as basis for segmentation (Fraj and Martinez, 2006). Food-Related Lifestyle is an instrument which make use of and builds on previous work on lifestyle in marketing, as well as cognitive approaches to the analysis of consumer behavior such as goal hierarchies and cognitive structural research, first defined by Grunert et al. in 1993. Food-Related Lifestyle include of five components: Higher order food product attributes, consequences of consumption, ways of shopping and ways of preparing food and use situations. The instrument is designed to be able to measure to detect trends among consumers over a period of time, which also go across cultures (Grunert, Brunso and Bisp, 1993).

Consumer Sustainability Consciousness (CSC) is a highly relevant classification variable and is an instrument designed for segmentation of the sustainable consumer (De Carvalho, Salgueiro and Rita, 2015). In their paper “Consumer Sustainability Consciousness: A five dimensional construct” the authors found that triggers for

sustainable decision-making are influenced by various perspectives but narrows down to five dimensions of consumer’s sustainability consciousness. The first dimension is “Sense of Retribution” which refer to how increased awareness of sustainability issues make people question their own unsustainable habits and how they negatively affect these environmental and social problems (Maiteny, 2002). The second is “Access to

Information” which refer to the relationship between knowledge and availability of information and how it may affect motivation for sustainable purchases. The third is

“Labelling and Peer Pressure” which refers to how environmental-labels and «social proof” may act as motivational guides to sustainable consumption. The fourth is “Health Issues” which refer to how a growing awareness of chemicals in food and interest in wellness and personal health may affect purchase decisions. Fifth is “Crisis Scenario”

which refer to how people may re-evaluate their consumption behavior in i.e., economic crises and only purchase wat is necessary.

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2.4 Nudge theory

What is nudging?

The definition of the word “nudge” is “to push something or someone gently” (NUDGE | meaning in the Cambridge English Dictionary, 2020).

“Nudging” is a term from Behavioral Science, Economics, and Political theory used to influence the behavior and decision making of groups or individuals using suggestions and positive reinforcement in a non-intrusive way.

Nudge means carefully guiding people behavior in desirable direction without using either carrot or whip. Instead, when nudging one arranges the choice situation in a way that makes desirable outcome the easiest or the most attractive option. Further, nudging is an umbrella term for deliberate and predictable methods to influence or change human behavior by modifying the choice context. Central to behavior is decision-making from the available choices.

“Nudges” are small measures that aim to influence people's actions in the desired direction without the use of coercion, punishment or financial reward. Nudges do not try to change one’s value system or increase information provision, instead they focus on enabling behaviors and private decisions that are good for the individuals and often for the society as well.

Richard H. Thaler and Cass R. Sunstein are mainly given the credit for the Nudge theory, which was strongly based on the Nobel prize-winning «heuristic» work of the

psychologists Daniel Kahneman and Amos Tversky in the 1970s. The concept “Nudge”

was made available to everyone through the international bestseller from 2008, “Nudge – Improving Decisions About Health, Wealth and Happiness”. Kahneman's 2012 book Thinking, Fast and Slow covers much of the basic Kahneman-Tversky theory on which the Thaler-Sunstein “Nudge” theory is founded.

In their book, Thaler and Sunstein defined their concept as this: “A Nudge is any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates.

Putting fruit at eye level counts as a nudge. Banning junk food does not.” (Thaler and Sunstein, 2009).

However, their definition has been discussed as too broad and inaccurate in scientific circles. The Danish leading behavior researchers Hansen and Jespersen (2013) proposed an alternative definition: “A nudge is any attempt to influence people's judgment, choice or behavior in a predictable way (1) made possible due to cognitive disturbances in the individual and social decision-making which constitute barriers for people to perform rationally in their own interest, and (2) work by making use of these biases as an integral part of such attempts.” (Hansen and Jespersen, 2013). Nudge theory seeks to

understand the "heuristic" influences on human behavior.

A heuristic is a mental process people use to solve problems and make judgments quickly and efficiently. Heuristic rule-of-thumb strategies are used to speed up the process of finding a satisfactory solution referred to as “mental shortcuts” that ease the cognitive load of making a decision (Kahneman, 2011). Heuristics are helpful in many situations, but they can also lead to cognitive biases. Daniel Kahneman and Amos Tversky, the

“fathers” of behavioral economics, developed the first theories of heuristics and cognitive

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biases (Kahneman and Tversky, 2017). Cognitive biases, a term introduced in 1972 by them, are the systematic errors that occur as a result of our heuristics. A cognitive bias is a systematic error in thinking that occurs when people process and interpret external information (not in their minds) and influence people's decisions and assessments. Our brain is powerful but has limitations. Cognitive biases are often the result of the brain's attempts to simplify information processing. Biases – just like heuristics – act as mental shortcuts that help people understand and make decisions faster. Some of these biases are related to memory, while others to attention problems (Cherry and Gans, 2020).

To understand and utilize these Human heuristics is important and central to changing behavior. Designers or choice architects must take into account basic human instincts, shortcomings and habits to design effective solutions for changing behavior. Central to behavior is decision-making from the available choices.

The Nudge theory is referred to as “a more sophisticated” approach aiming to achieve behavior change in humans. Nudging is based on indirect encouragement and activation as opposed to traditional methods of direct instruction, enforcement or punishment.

Nudges can be used in different areas of life and often used to encourage people to choose the healthiest or most environmentally friendly options.

Nudge theory is a rather modern and adaptable concept and BusinessBalls.com (2017) summarizes what Nudging is and what it can be used for as follows:

1. Understanding how people think, make decisions and behave.

2. Help people improve their thinking and decisions.

3. Manage change of all types, as well identify and change existing negative impacts on humans.

A well-known effective example of a nudge, that took place in the 1990s, is the etching of a fly inside the urinal at Schiphol Airport in Amsterdam which resulted in a reduced spillage by 80% (Thaler and Sunstein, 2009). This example follows the below four important rules of behavioral design and is thus successful as a nudge (Mitchell, 2019):

1. Align incentives with desired behaviors.

2. Provide clear, visible, and immediate feedback to reinforce desired

3. Simplify and structure choices when decision-making parameters are complex 4. Make goals and performance status clearly visible.

Another simple and experimental proof of effective nudging to prevent people from overeating is to introduce smaller plates (Varakli, 2018). By reducing the size of a serving fewer calories are consumed.

There is a distinct difference between influencing nudging and traditional marketing or and advertising. Nudging is about influencing people's behavior and decision making without them knowing it by using suggestions and positive reinforcement in a non-

intrusive way. Traditional marketing and advertising are about persuading and convincing people to buy things through direct instruction and enforcement, often in an intrusive way (Panousis, 2016).

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Table 2.1 illustrate these differences between traditional forced change and nudge techniques.

Enforced change Nudge techniques

Instructing people to wear a facemask (COVID-19)

Warning signs of fines if littering.

Joining a gym.

Counting calories.

Weekly food shop budgeting.

Recommending people to wear a facemask (COVID-19)

Improving the availability and visibility of litter bins.

Riding your bike to work.

Smaller plate.

Use a basket instead of a shopping cart.

Table 2.1: The difference between traditional forced change and nudge techniques.

Many factors affect behavior, and commonly used are “Framing”, “Relevance” and

“Mood-change”. Knowledge about these Nudge techniques are used by the advertising industry consciously in their attempt to influence customers emotionally to buy their product. What separates nudging and advertising is whether the goal of the Nudge design or intervention is to positively reinforce people make a decision to buy in a non- intrusive way or convince them through direct instruction and enforcement.

How we think – two systems of the mind

Our brain works in an incredible way, but “fools itself” or operates “biased” (Thaler and Sunstein, 2009) and causes humans to fail all the time, intentionally or unintentionally.

The intention may be not to overconsume; however, it happens every day. People have a hard time following their good intentions and their everyday behavior creates problems for them or the environment. According to Krukow, (2013) this is the biggest threat to mankind today (Krukow, 2013). Why this happens can be explained by the fact that people have limited time, motivation or resources to consciously reflect on choices and instead use automatic processes as the "rules of thumb" previously explained, which are prone to biases and therefore may lead to poor decisions.

Daniel Kahneman proved in his work and research about decision making that our brain is operating two systems (Kahneman, 2011). Human behavior is driven by these two systems and the two modes of thought operate differently. System 1, also referred to as the Automatic system, works unconsciously, intuitively and automatically, and System 2 referred to as the Reflective system works consciously, reflective and rationally

(Kahneman, 2011). System 1 automatically assesses a situation and delivers updates and suggestions to system 2 who consciously turns them into beliefs which may trigger a decision to take action.

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The differences and characteristics of the two cognitive systems are illustrated in table 2.2.

Table 2.2: Characteristics of the two cognitive systems (Kahneman, 2011).

Because decision-making is driven by the mental shortcuts (heuristics) our automatic brain uses to conserve mental energy for our reflective brain which contribute to reduce the cognitive strain of making a decision (Kahneman, 2011). Therefore, heuristics affect our decision-making and subsequently also consumer behavior. The challenge with heuristics is that they may be wrong or biased and are only mental shortcuts which usually involve focusing on one aspect of a complex problem and ignoring other. Humans are biased by many aspects such as our imaginations, memories and how choices are worded. The Automatic system is most vulnerable to biases, temptation, and risk-related behavior. Choice architects can take into account system one's vulnerability, and support rational decision making or behavior by helping the Reflective system 1 override the Automatic system 2.

Evans et. al, explain how the theory of system 1 and 2 works as follows relative to nudging: “System 1 nudges” influence behavior by “re-biasing” an individual, i.e., exploiting biases such as the propensity to stick with the status quo. Conversely,

“System 2 nudges” generally “de-bias” the individual, thereby facilitating active thinking”

(Evans, 2017). Effective design solutions for changing human behavior needs to take basic human instincts, flaws, and habits into consideration. An example is the basic instincts "pack mentality”. Humans mirror people around them which overrules our good intentions and knowledge. Another example is "human flaws” such as limited attention.

People live in the now.

Thaler and Sunstein's theory of Nudging builds on Kahneman's theory and seeks to support or prevent people from making poor choices based on individual heuristics and cognitive biases which arise as a result of humans' decision-making processing.

According to them there are three main categories of human heuristics and cognitive biases (Thaler and Sunstein, 2009): “Rules of Thumb”, “Resisting temptation” and

“Following the herd”.

In table 2.3 the main human heuristics and cognitive biases presented by Thaler and Sunstein is explained.

System 1 – the Automatic system System 2 – the Reflective system Uncontrolled

Effortless Associative Fast

Unconscious Skilled

Controlled Effortful Deductive Slow Self-aware Rule-following

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Rules of Thumb (mental shortcuts)

Anchoring Anchoring means to use comparable experience, knowledge or facts and use it as a basis for deciding on something unknown.

Availability Availability is a heuristic that is our perception of how to present, usual or visual something is. If we easily can relate to a dangerous situation or incident, we are more likely to be concerned that such a situation will occur again. If we are heavily exposed to a message (orally or visually), the greater are the chances of trusting that to be true.

Representativeness The representativeness heuristic is about comparing or assuming how similar something is to an assumption or perceived stereotype.

Optimism/

overconfidence

This heuristic means to have an unrealistic and overly optimistic relationship to reality. This may mean that the ability to see risk or outcome of a thing is impaired and underestimated and that the outcome of something (gain) and the ability to master unknown things is overestimated.

Gains and losses /

loss aversion Loss aversion is a heuristic that operates in a way that makes us not do changes even if they might benefit us.

Status quo bias and

inertia This heuristic relates to when people stick to a “safe”

situation they know rather than giving up something for the unknown. The status quo bias is often due to laziness, aversion to the unknown and to get involved in something that is perceived as complicated or unnatural like reading small print in agreements, etc.

Framing Framing is a powerful nudge that must be used with caution.

People may respond differently to the same question depending on how it is formulated and presented. The nature of the question changes and can lead to positive or negative perceptions, different associations or ways of distorting to what extent something is unattractive or attractive.

Resisting temptation

Temptation This heuristic refers to people's greed, inability to resist temptation, the urge to satisfy the ego, needs, etc. Issues related to the lack of self-control is a result of

underestimating the effect or arousal that we experience when satisfying our needs. Most people know that temptation exists and take precaution against it.

Mindlessness This is about people's tendency to form spontaneous,

unconcentrated views and decisions without considering that the decision negatively affects them.

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Self-control strategies These are techniques people use to counter their own heuristic weaknesses, which thus become heuristics. People are described as “Planners”, steered by the Reflective system and “Doers”, heavily influenced by the Automatic system. From time to time our two parts of our brain (that) we use are in conflict and battles over the right decision.

When a lack of self-control and mindlessness combine, the outcome for “Doers” are crucial. By knowing this, we see that a number of people could benefit from a friendly nudge in a safe and healthy direction. To practice internal control- systems or “mental accounting” is another way to prevent bad outcomes or i.e., stay on budget.

Follow the herd

Conforming – following the herd and social influences.

This refers to the “fact” that people are easily affected by what other people do. Conformity and to follow the herd relate to people's need for affirmation and belonging, on top of the fear of isolation and exclusion from the group. The effect is further enhanced through social media and the internet, as well as by cultural factors. Social influences are divided into two groups. The first is information. If many believe the same about that information, it conveys that this is correct and what one should consider, do or think. The others include peer pressure and whether you care about what people think about you. In a case like this, you might

“go with the crowd” to “avoid their wrath or curry their favor” (Thaler and Sunstein, 2009).

Spotlight effect This heuristic is about thinking that your actions and presence are interesting to other people. This produces nothing but stresses on thinking and decision-making.

Because people tend to think like this, they conform to what they think are their expectations.

Priming Priming is the manner in which people are prepared when introduced to a situation or option is introduced. Priming refers to the workings of the Automatic system and research shows that subtle influences can make it easier to recall certain information. Just a hint of an idea or concept could trigger an association that can stimulate action, and it occurs in social situations. Priming is the third social influence Thaler and Sunstein refer to in their book “Nudge”.

Language and signage design - 'stimulus- response compatibility' - or 'choice architecture'

This term refers to the degree to which something is designed effectively so that the design helps to understand and respond to it in the best possible way. A classic example is how traffic lights are designed where red represents 'stop' and green 'walk'. It is important to have a good

understanding and include human factors in design whether we design products or choice architecture exactly because they are human. In the book Nudge the authors Thaler and Sunstein (2009) aimed to develop the same idea for choice architecture.

Table 2.3: An overview of heuristics and cognitive biases (Thaler and Sunstein, 2009).

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